From Baa1: outlook negative

  • Cites increased medium and long term fiscal concerns, external vulnerabilities for Hungary downgrade
  • Hungary govt relies on temporary measures; structural budget deficit is set to deteriorate
  • Longer term implications of Hungary’s pension system changes are negative for public finances
  • May again downgrade Hungary if govt fails to stabilise its financial strength
  • Stabilisation of Hungary govt financial strength may be complicated by increased risk aversion from investors, fx pressures
  • Could revise Hungary outlook to stable, eventually upgrade rating if country starts sustainable consolidation
  • Hungary’s strengths include membership in European Union, strong FDI position